In March of this year, when international oil prices surged due to the Middle East crisis, morning rush-hour traffic in Seoul fell only in the 1% range from the same period a year earlier. The government strengthened the odd-even driving rule in the institutional sector for public-sector vehicles, and major corporations also joined in reducing operations, but the demand-suppression effect did not meet expectations.
It is attributed to the effect of the oil price cap suppressing the rise in domestic fuel prices, which kept consumers from feeling a significant burden.
According to the Seoul Transport Operation and Information Service (TOPIS) on the 27th, average traffic from 7 a.m. to 9 a.m. on weekdays in March across 21 Han River bridges, including Hangju Bridge, Olympic Bridge, and Seongsu Bridge, was 112,665 vehicles. That was down 1.3% (1,492 vehicles) from the average of 114,157 vehicles during the same hours in March last year.
The decrease in evening commute traffic was somewhat larger than in the morning. From 6 p.m. to 8 p.m. in March, an average of 96,976 vehicles entered and exited the 21 Han River bridges, down 3.4% (3,366 vehicles) from 100,342 during the same period last year.
However, given the surge in international oil prices due to the war between the United States and Israel and Iran, the traffic difference was limited. The international gasoline price (research octane number 95 standard) jumped 70% ($56.52) from $81 per barrel in March last year to $137.52 in March this year.
This contrasts with March 2022, when the international gasoline price rose 78.5% from a year earlier due to the fallout from the Russia-Ukraine war. At that time, morning rush-hour traffic across the 21 Han River bridges fell by more than 3% year over year. This time, despite a similar jump in international prices, the decline in vehicle operations was only about half as large.
The oil price cap by the government is cited as the reason. In March this year, the average retail price of regular gasoline in Korea was 1,836.41 won per liter (L), up just 8.7% (147.48 won) from the same month last year. Compared with the rise in international gasoline prices over the same period, that is about one-eighth as much. Analysts said that because the spike in international oil prices was not fully reflected in consumer prices, demand for private car use did not fall significantly.
The government has been implementing the fourth oil price cap since on the 24th. Beginning with the second oil price cap, prices were frozen for six weeks, keeping the maximum wholesale price at which refiners supply to gas stations at 1,934 won per liter for gasoline and 1,923 won for diesel.
President Lee Jae-myung has also agreed with the view that price controls could increase fuel consumption. At a Cabinet meeting and emergency economic review meeting on Apr. 14, Lee said, "There is a counterargument that lowering prices is not 100% the right thing to do, and that is a valid point," adding, "We need to reduce consumption."
International organizations such as the International Energy Agency (IEA), the Organization for Economic Cooperation and Development (OECD), and the International Monetary Fund (IMF) recommend that during periods of surging energy prices, governments selectively support vulnerable groups rather than impose blanket price controls, and temporarily support only an appropriate amount of consumption to curb overuse.